Don’t be passive when managing investment costs

As you know, gains in your stock investments are not guaranteed, even though it may feel like it if you’ve been invested in the market for the last decade.  Looking at the last five years, the S&P 500 index has increased an average of nearly 17% annually, with only minor corrections along the way.  In fact the S&P 500 returns have been so consistent that most large cap equity funds haven’t been able to beat this performance. Over a five year period only 17.6% of large cap equity funds beat the S&P Index (see exhibit 1 below).  In other words, if you had simply invested in the S&P 500 index then you would have done better than the majority of professional stock investment managers. But that’s not the end of the story. Even if you had invested in a fund that tracks the S&P 500 index, you still could have under-performed depending on the fees you paid to the investment company that managed your money.  Continue reading “Don’t be passive when managing investment costs”

3 ways the new tax act impacts your personal finances

The new tax act, also known as the Tax Cuts & Jobs Act, includes a number of important changes that will directly impact your tax liability and indirectly effect your investments. Here are three key ways your personal finances will be impacted by these changes:  Continue reading “3 ways the new tax act impacts your personal finances”

Have we declared our financial independence?

Financial literacy (a.k.a. FinLit) is the education and understanding of various financial areas, such as saving, spending, investing, insurance, budgeting, retirement and tax planning. The positive impacts of financial education on people are clear, as are the negative impacts to those that lack FinLit.

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Investing in picks and shovels

I don’t profess to know much about digital currencies or marijuana, but I do know something about speculative investing.  If there’s one thing I know, it’s that you’ll see history repeat itself if you’re around long enough and paying attention.  As it relates to the current digital currency mania, seen in the astronomical price increase of bitcoin, we’ve been here a few times before.  I’m certain you’re not old enough to remember the 17th century tulip bubble crash in the Netherlands or the “gold rush” in the 1800’s, but the “digital currency rush” is similar.  The rapidly rising prices and a fear-of-missing-out creates a frenzy that drives investors to bet it all (or too much) in hopes of getting rich quickly.  Continue reading “Investing in picks and shovels”

Great sites for staying up-to-date on money matters

If you read my prior post on developing financial know-how, then you’ll know that keeping up to date on personal finance news and information is one of the steps in the advancement cycle.  The great thing is that in this age of online subscription services you can select topics that matter to you and have the information delivered directly to you.  I have a few different information services that feed updates on personal finance to my email and Twitter accounts.  These feeds provide information on a range of topics and are particularly useful if you are nearing a significant life goal like starting or changing careers, or deciding when and where to retire.  I receive feeds from a number of different sources, including those specific to industries or technologies I’m following for investing purposes.  It’s easy to get overloaded and overwhelmed with all of the different sources, so I recommend getting started with a few that allow you to better understand how to financially plan for life events, stay on top of your money, and comparison shop products and services.

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Developing financial know-how by learning to speak money management

You may have heard the term “financial literacy” which by definition is the education and understanding of various financial areas, such as saving, spending, investing, insurance, budgeting, retirement and tax planning.

Financial literacy fundamentals are often taught in schools starting in middle or high school, with mixed results at best.  A study completed by George Washington University and PwC proves this point.  Based on a survey of over 5,500 Millennials, it was determined that only 24% of Millennials exhibited basic financial literacy, and only 8% demonstrated high financial knowledge.  Part of the problem is that school-taught financial literacy focuses on concepts with limited application to the school-age audience.  To help this young audience succeed over time, we must be prepared to offer timely support to foster “financial know-how”.  Continue reading “Developing financial know-how by learning to speak money management”